1. Liability to Tax

2. Introduction Every dealer engaged in inter-state sales is liable for tax even if no tax is leviable under state laws. However, a dealer is not liable for tax if sale amounts to exports from India. Electric energy, though ‘goods’ is excluded from the liability. Liability of tax is on the dealer, levy of tax is by Government of India and tax is collected by the registered dealer in the State.

3. Liability to tax on Inter-State Sales The transaction must be an inter-state sale within the meaning of Sec.3 The tax is to be levied at the rates prescribed under 8(1) and 8(2) and to be calculated accordingly. Such tax must be levied and collected by the Government referred to in Section 9(1)in the manner provided in Section 9(2). The tax so collected shall be appropriated by the State in the manner specified in Section 9(3). If the local rate is less than 2% then the tax on the inter- state shall also be the same. The assessment of tax will be subject to appeal, revision etc.in the same manner as assessment under State Law.

4. Subsequent Sales 6(2) The first sale must have been a sale in the course of inter- state trade or commerce. Subsequent sale must have taken place during the movement under the first sale. Subsequent Sale must be to a registered dealer-: a)Goods are of description reffered to in section 8(3) b)Declaration in the prescribed forms are submitted to the prescribed authority. The subsequent sale is effected by a transfer of documents of title to the goods. Form E-I is to be submitted by first dealer while Form E- II is to be submitted by subsequent dealer.

5. Exemption from CST Subsequent Sales by transfer of documents Inter-State Sale by SEZ units Exemptions to supplies to foreign mission/UN etc. Sale in the course of Export Penultimate sale of Export Sale in the course of Import

6. Important Points regarding Liability to Tax Categories of Inter-State Transactions-: 1. All sales to Govt. and sales to a registered dealer other than the Govt.2. sales in respect of declared goods. 3. Residual sales Three Stages in imposition of tax. These are: a) Declaration of Liability b) Assessment c) Method of Recovery Liability is annual Filling of forms and returns Furnishing false certificate is an offence